As Donald Trump escalates his trade war with China, slapping a 10% tariff on roughly $US200 billion of imports that will climb to 25% if China retaliates, he appears to found something of a soul mate in Scott Morrison.
“We both get it,” Australia’s new prime minister said this week. What they get, he told the New York Times’ Maureen Dowd, is that some people feel left off the globalism gravy train: “The president gets that. I get it.”
The US aims to secure trade routes through the Indian and Pacific oceans. China wants to shift the bedrock of international trade to Central Asia.
Its Belt and Road Initiative is a grand strategic plan to join Eurasian economies from Lisbon to Vladivostok. The plan would end the historic era of Anglo-American hegemony founded on controlling trade routes across the Atlantic, Indian and Pacific oceans.
Leaving political ideologies aside, its economic prosperity depends on trade by sea. The return of Marco Polo’s world would eventually make Australia little more than a price-taking commodity supplier to trade and investment hubs from Beijing to Venice.
This means our national interests lie with the US defence of its seaborne trading routes.
Picking a side will be costly
In the short term, especially if the trade war escalates, siding with the US will be costly. We could lose a good deal of China-related export and business opportunities. Over the longer run we could offset the losses by diversifying to trade and invest in countries with shared strategic interests, such as Indonesia and India.
After a promising start, RCEP negotiations now appear to be stuck. The main obstacle is India’s fear of worsening its already significant trade deficit with China.
Our interests lie with the US, and India
Another sticking point is that India, the Philippines and other potential members want countries like Australia, New Zealand and Japan to open up their markets for information technology and professional services.
In pure trade terms we would lose little if the RCEP did not proceed. We already have strong bilateral ties with all the negotiating countries apart from India, with whom we are presently negotiating a free trade agreement.
We would be well advised to use our limited diplomatic resources for that and supporting the US when it comes time to pick sides.
Prime Minister Malcolm Turnbull’s so-called “China reset” should be viewed for what it is. That is, neither a self-criticism of mistakes made in managing the China relationship, nor necessarily a self-confident assertion of Australia’s foreign policy priorities.
For all intents and purposes, Turnbull’s speech at the University of New South Wales last week was an exercise in damage limitation, as he trod lightly over vexed issues in relations with Beijing.
Among the motherhood statements about contributions Chinese-Australians have made to the greater good was a key passage in which Turnbull emphasised a common interest in “free trade and open markets in every part of the world”. He said:
So in the midst of this rapid change, Australia continues to address its own interests by pursuing a relationship with China based on mutual respect and understanding. For our part, we act to advance Australia’s prosperity, ensure independence of our decision-making, and secure the safety and freedom of our people.
After this summation of the national interest, Turnbull reproduced a quote from Chinese President Xi Jinping to the Australian parliament in 2014, long before any thought of a disruptive Donald Trump presidency had materialised. At the time, Xi said:
The United Nations Charter and the basic norms governing international relations should apply to all countries. With that, countries big or small, strong or weak, rich or poor, are all equal. This means not only equal rights and interests for all countries, but also equality of all countries before international rules.
In doing so, Turnbull sought both to assert Australia’s sovereignty in pursuit of its own interests, and also to remind Xi of China’s commitment to a “rules-based” international order.
This was diplomacy at work, prompted by a realisation that relations with Australia’s cornerstone trading partner have become strained – due partly to Turnbull’s own clumsiness, which I will come to later. His mission on this occasion was to unstrain them.
Beijing has put Canberra in a freeze for the past year or so over statements by both Turnbull and Foreign Minister Julie Bishop that were regarded as unhelpful. China took particular exception to a Bishop speech in which she criticised its political model.
Bishop herself has not been to China for two years. As a consequence, relations are perceived to be drifting or, worse still, in a state of disrepair.
Judging by Beijing’s mild response to Turnbull’s speech via a foreign ministry spokesperson – and the presence in the audience at UNSW of China’s ambassador to Australia and its consul-general in Sydney – the prime minister achieved part of his objective.
This was Australian statecraft at work, driven not by China hawks in Canberra, or advisers who are jaundiced where Beijing is concerned, but by realpolitik.
In other words, no purpose would be served by a continued freeze in relations with Beijing, notwithstanding real policy concerns about Chinese assertiveness in both the South China Sea, and in Australia’s own southwest Pacific sphere of influence.
Turnbull had yielded to diplomatic advice to separate domestic politics from foreign policy, as if such advice should have been necessary.
Department of Foreign Affairs and Trade advisers, led by the Chinese-speaking head of DFAT, Frances Adamson, had secured a “battle victory not a strategic victory”, in the words of a prominent Canberra China-watcher.
Why is a reset needed?
In all of this, the question might reasonably be asked: how did Australia manage to aggrieve its cornerstone trading partner in the first place?
The answer to that question lies partly in Turnbull’s own poor political judgement.
The prime minister makes much of his China experience as a merchant banker seeking to do deals on the frontier of that country’s economic emergence in the 1980s.
On the evidence, Turnbull still has a bit to learn about dealing with China, including the importance of nuance. The Chinese are masters of diplomatic subtleties – unless it suits them to be otherwise.
Turnbull’s error was to frame Australia’s foreign interference laws – aimed at limiting the ability of foreign entities to intrude into Australian domestic politics – in such a way that his public statements caused unnecessary offence in Beijing.
While these laws clearly had China’s state propaganda apparatus and Chinese money in mind, there was no need for Turnbull to rub it in. And yet rub it in he did.
On the last occasion, he said it in his own version of Chinese. Such phraseology – “the Chinese people have stood up” – has sacred meaning in China. This was the expression attributed to Mao Zedong when proclaiming the People’s Republic in 1949 after decades of foreign interference, including unspeakable crimes by the Japanese.
It might also be observed that China is not the only country that seeks to influence Australian domestic politics via its various agencies and an active diaspora. Hardly less assiduous in its attempts to exert pressure on an Australian political process is the State of Israel, via its own government and semi-government apparatuses and an assertive domestic lobby.
Complications arise when activities cross a boundary between the legitimate exercise of soft power and attempts to corrupt the political process, or resort to forms of intimidation.
Where to from here?
There is no doubt that managing relations with China is challenging, especially at a time when Beijing is constantly testing the limits of what is acceptable in ruthless pursuit of its interests.
A mercantilist China will seek to get away with what it can.
That said, Australia has no choice but to strive to get the balance right in dealing with a rising power whose trajectory is such that by mid-century, or sooner, it will have the world’s largest economy and a military capability that will enable it to project power far beyond its shores.
Turnbull’s early priority should be to restart bilateral interactions at senior level, including a Beijing visit before the year is out either by himself or by Bishop.
Where Turnbull was on firmer ground in his UNSW speech was in the emphasis he laid on shared interests with China on free trade and open markets. Leaving aside Chinese mercantilism in which it invariably seeks to tilt the trade environment in its favour, Turnbull identified what is clearly a common interest, and one that needs to be exploited.
This is resistance to the sort of trade bluster emanating from Washington in which the Trump administration seems bent on disrupting an international trading environment that is being run ragged by capricious policymaking. Turnbull said:
When it comes to trade, we should never forget that protectionism is self-defeating, not a ladder to get you out of the low growth trap, but a shovel to dig it deeper… In trade, there will always be more winners, more growth and more jobs, on a level playing field.
In the end, relations with China can be likened to a long march, in which each step along the way needs to be taken with care – or as Deng Xiaoping might have advised: Cross the river by feeling the stones.
In contrast, he displays indifference – if not hostility – towards the liberal rules-based order that has served US interests since World War II. Issues like human rights, trade, climate change, and even America’s democratic allies have all been criticised or undermined by the president during his time in office.
But is the explanation that simple or is there something else at work? Is there a strategy that, President Trump and his allies believe, serves America’s geopolitical interests? If there is, it’s about China.
America’s ideological problem
Consider that there are a number of states throughout the Asia-Pacific and across Eurasia that may soon be “up for grabs” as US-China tensions escalate and states hedge their position. Clearly, Washington wants as many states as possible to maintain their strategic distance from Beijing and lean towards the US. This is a task that will become more difficult as China’s power continues to rise and America finds it harder to reassure its allies that it can maintain its dominance in the region.
A number of these states have authoritarian governance systems, forms of illiberal democracy or may be trending in this direction. They do not share America’s governing liberal ideology. This ideological difference could complicate America’s efforts to keep these states out of China’s orbit, which claims to have no interest in the domestic affairs of other states.
US foreign policy since the end of the Cold War cannot have reassured authoritarian and illiberal states that Washington’s ideological values play only a minor role in it. US foreign policy, at times, has looked like that of a revolutionary power intent on transforming the international system in its own image. After all, the Bush administration appeared to believe that the only way for the world to be safe was for liberalism and democracy to triumph everywhere, which could usher in a global democratic peace. This is an assumption with some empirical support.
Furthermore, the immense power of the US may have made it difficult for non-liberal states to feel assured that even if they complied with US demands to give up their weapons of mass destruction (which they perceive as a critical deterrent to US intervention), they might still face further requests and threats. As Libya’s dictator Muammar Gaddafi found out in 2011, even a regime change can be a consequence.
Addressing a disadvantage
So how does all this tie back to America’s competition with China for the allegiance of states across the world? What could encourage authoritarian and illiberal states, in particular, to lean towards China in the years to come and accelerate the emergence of a bipolar US-China system?
Firstly, America’s power provides it with immense discretion to act and the capacity to undermine and enact regime change against illiberal states. Since 2003, we’ve seen this in Iraq, Afghanistan and Libya. Secondly, it is US ideology, and their fears that US power will be used for ideological ends – that is, to militarily intervene against illiberal states to try replace their regimes with liberal ones. The first point can generate concern all on its own but it’s further magnified by the second point.
To illiberal states, US liberalism has compelled Washington in the past to go abroad “in search of monsters to destroy” – and they are the ideological “monsters”.
Therefore, a case can be made that if the US credibly communicates that it is not motivated by liberal impulses, it will reduce these ideational concerns. It will increase (by how much is debateable) incentives for states to lean towards the US. Thus, American liberalism, rather than being seen as a source of strength, could leave the US disadvantaged as China’s power rises.
Trump’s challenge to the liberal order
Trump’s recent behaviour towards the G7 is consistent with this. It further communicates the point to authoritarian and illiberal states that this administration does not care about a state’s ideological stripes. This approach even gives President Trump more room to manoeuvre to attempt his own “Nixon to China” initiatives towards Moscow (if he can overcome domestic opposition) and Pyongyang.
Rapprochement with North Korea could reunify the Korean peninsula in a way that benefits the US at China’s expense (as well as eliminating a nuclear threat). With respect to Russia, it could stop Moscow’s drift towards China, and eliminate the prospects of Eurasia coming under the effective domination of a China-Russia led de facto alliance. Removing liberal ideology from the picture removes one roadblock towards these geopolitical initiatives.
The Trump administration appears to believe there is little material costs to adopting this approach. America’s traditional liberal allies lack the will to pay for their own defence and thus cannot constitute a true challenge to US global power. They can issue rhetoric and voice their opposition to US foreign policy but President Trump, rightly or wrongly, does not view these as meaningful forms of influence.
Ultimately, to the US president, liberalism is an ideology with no clear foreign policy benefit. To him it is one that could, at worst, act to drive states towards China, accelerating the emergence of a bipolar world order. This is one consistent element of the president’s strategy. The faster we reconcile ourselves to this, the quicker we will be able to grapple with the implications his foreign policy has for the existent liberal international order.
Chinese infrastructure investment in Australia has rarely left the headlines lately. It’s reported that telecommunications giant Huawei will likely be banned from building Australia’s 5G network on national security grounds. Hong Kong-based company CK Infrastructure’s bid to buy APA Group’s gas pipeline network is also proving controversial.
Greater scrutiny of investment projects is welcome, especially if community and environmental concerns are also considered. However, Australia could benefit from the availability of Chinese infrastructure financing.
Given the state of relations with China and Australia’s pressing infrastructure needs, the Australian government must develop a clear strategy for Chinese infrastructure investment. Instead of passively scrutinising bids, the government should proactively identify worthwhile projects and engage Chinese counterparts to finance and implement them.
A proactive approach could benefit Australia because Chinese infrastructure investment is not as strategically directed as many assume. This is clear if we examine the Belt and Road Initiative (BRI) – the centrepiece of China’s global infrastructure financing spree.
President Xi Jinping has undoubtedly used the BRI to signal China’s rise to “great power” status. But its main drivers are domestic and commercial. At its core, the BRI is an effort to alleviate China’s industrial overcapacity problem in key sectors, such as steel, glass, cement and aluminium.
Overcapacity has worsened since the global financial crisis, as Beijing sought to maintain growth by encouraging an infrastructure construction boom. State-owned enterprises (SOEs) spearheaded this. After profitable domestic opportunities had dried up, international expansion became attractive, to keep SOEs working and to find more productive outlets for China’s huge foreign currency reserves.
The BRI’s implementation has reflected competition, lobbying and compromises among ministries, provinces and SOEs. Its masterplan document – “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road” – is a case in point. It contains 50 “priority areas”. These cover virtually every governmental and non-governmental activity, showing little actual prioritisation.
Early statements suggested a BRI focus on Central and Southeast Asia. But since 2015 the initiative has been formally opened to all countries. This was again due to intense lobbying from provinces, SOEs and some foreign governments. All are keen to get some of the action, suggesting little strategic direction.
The vague and loose Belt and Road plan has enabled considerable scope for interests within the Chinese party-state to use it for their own, economically motivated, agendas, with little consideration for Beijing’s wider diplomatic objectives. This has generated a rather chaotic, “bottom-up” process for selecting and funding projects.
Belt and Road project ideas usually emerge from state-owned enterprises’ in-country subsidiaries. After spotting an opportunity, they try to build support in the recipient government. Occasionally, this includes bribing officials. They also often seek to obtain the local Chinese embassy’s support to improve lobbying back home.
Once agreement with the recipient government is reached, the SOE or the recipient government applies for financing from China’s policy or commercial banks. The banks determine whether to extend credit after assessing repayment capacity. The central government’s involvement is typically limited to the National Development and Reform Commission’s formal approval.
Chinese infrastructure projects are not risk-free. The potential for misuse of key infrastructure to serve Chinese strategic agendas is clearly the Australian government’s foremost concern. But there are more immediate issues too.
Chinese banks’ lending standards are well below world “best practice”. They give limited consideration to social, environmental and labour protections when awarding financing to projects.
Tough competition between Chinese companies means they have strong incentives to cut corners and promote projects that recipients do not need. The latter can be saddled with unnecessary infrastructure and potentially unsustainable debt. Furthermore, Chinese central agencies’ capacity to regulate SOEs’ offshore activities is weak, so they cannot be relied upon to manage these problems.
Closer scrutiny of investment proposals is, therefore, clearly necessary. So, too, is tight regulation of project implementation. Australian regulators should also ensure Chinese projects adequately resolve social, environmental and labour concerns.
The fragmented nature of Chinese investments provides opportunities, however, for selective engagement that could serve the wider public interest. This should form part of a clear Australian strategy towards China based on a nuanced analysis of both the threats and opportunities of this multifaceted relationship.
Two contributions made in separate forums in Parliament House on Tuesday captured the sharp cross-currents in the China-Australia relationship.
At the Australia China Business Council’s “Networking Day”, Chinese ambassador Cheng Jingye reiterated that China “never interferes in the internal affairs of other countries”, let alone engaged in “the so-called infiltration of other countries”.
The ambassador delivered little-disguised criticism of Australia. To dispel “the clouds” over bilateral relations, “the two countries need to have more interactions and inclusiveness, with less bias and bigotry… less cold war mentality”.
Over in the Coalition party room Liberal senator David Fawcett, chairman of the parliamentary foreign affairs committee, also had a forthright message, urging the cabinet to put security concerns at the forefront in considering the Chinese company Huawei’s push for a slice of the action in the 5G network build.
The government’s attitude to China’s protestations that it doesn’t interfere is one of, “it would say that”. Its view of claims by non-state companies such as Huawei that they have no connections with the Chinese regime is much the same.
For both sides of politics, the China policy challenge is to strike the right balance in a bilateral relationship now infused with Australian suspicion and openly-expressed Chinese irritation.
If Labor wins the election Penny Wong, now shadow foreign minister, will be shouldering much of that responsibility.
In her speech at the business forum, Wong criticised the Turnbull government’s management of the relationship and said “a more considered, disciplined and consistent approach is required”.
So how would a Labor government handle things? Wong outlined six “operating principles” that it would use:
A clear understanding and articulation of Australia’s national interests, which included the country’s security and prosperity, regional stability and constructive internationalism.
Acceptance that we live in a disrupted world.
Acceptance of China “as it is, not as others might perceive China to be or as China itself might represent itself”.
Acknowledgement of how important and beneficial China’s emergence as a major economic power has been to Australia and the world.
Pursuit of an integrated approach to the many strands of the relationship.
A commitment to working constructively with China and others in a regional framework.
Australia and China were very different culturally, politically and socially, Wong said.
“The important objective is to prevent differences from becoming disagreements, as far as possible. And when disagreements do occur, they must be managed with intelligence and tact,” she said.
“To the extent possible, Labor will work towards ensuring that our political relationship works on the same basis as our economic relationship – respect and trust based on dialogue and understanding. Respect and trust don’t just happen. They have to be built and maintained, and that’s what we intend to do”.
Of course it is easier to say how things should be managed than to manage the often tricky realities.
In his address to the forum, Malcolm Turnbull did not dig down deeply to those realities. He kept his references to differences to the easier, less sensitive ones. “Sometimes you’ll get issues at a fairly granular level,” he said, and referred to the problem with imports of Australian wine. “We went to work to ensure that that could be resolved and indeed so it was”.
Turnbull also suggested the reality wasn’t always as it was portrayed. “Sometimes in the media there is always going to be an emphasis on differences, on conflict, on problems”.
It was a superficial speech – which can be defended on the grounds that it can create more trouble than it is worth to be too blunt in public about the actual problems. Also, Turnbull regarded it as a business occasion rather than one for a more formal foreign policy presentation.
The crack at the media was, however, a cheap and not very honest shot. The media is often simply saying publicly and directly what the government is saying privately or more obliquely. It’s notable that Andrew Hastie, Liberal chair of the parliamentary intelligence and security committee, recently put on record (under privilege) allegations against business figure Chau Chuk Wing, partly on the grounds of giving some backing to media outlets that are being sued over stories about him.
On other fronts this week, Huawei has been lobbying MPs to try to convince them it is as transparent as it claims, while Hastie’s committee is preparing its report on the legislation – which the government wants passed next week – for a register of agents of foreign governments and other foreign political interests.
The Australia-China relationship involves walls and whispers, as well as all the rhetoric about trust and respect.
Meanwhile the Lowy Institute’s annual poll, Understanding Australian Attitudes to the World, released Wednesday, suggests ordinary Australians are less galvanised by the China debate than the decision-makers.
“Australians remain remarkably sanguine about foreign interference in Australia’s political processes following the furore over Chinese-linked donations to Australian political parties, politicians, and institutions. Foreign interference remains a low-order threat in the minds of Australians, who are almost equally concerned about US influence as Chinese influence,” Lowy’s executive director Michael Fullilove writes in his introduction to the poll, done in March with a sample of 1200.
“Foreign interference in Australian politics” was seen as a “critical threat” by 41% – behind terrorism (66%), North Korea’s nuclear program (66%), climate change (58%), cyber attacks from other countries (57%), the prospect of a severe downturn in the global economy (50%), and the Trump presidency (42%).
Although the debate has been all about China, the poll found what concerns there were appear to be focused on foreign influence generally, rather than specifically Chinese influence. Asked about influence from both China and the US in Australia’s political processes, 63% expressed concern about China and 58% concern about the US.
In other findings relating to China
72% said the Australian government was “allowing too much investment from China”. In 2014, the figure was 56%.
46% believed it was likely “China will become a military threat to Australia in the next 20 years”.
But 82% said China was more of an economic partner to Australia than a military threat to it.
81% believed it was “possible for Australia to have a good relationship with China and a good relationship with the United States at the same time”.
In their attitudes to China, the Australian public may be alert but they’re not alarmed.
At a top regional security forum on Saturday, US Defence Secretary Jim Mattis said China’s recent militarisation efforts in the disputed South China Sea were intended to intimidate and coerce regional countries.
Mattis told the Shangri-La Dialogue that China’s actions stood in “stark contrast with the openness of [the US] strategy,” and warned of “much larger consequences” if China continued its current approach.
In recent years, China has sought to bolster its control over the South China Sea, where a number of claimants have overlapping territorial claims with China, including Vietnam, the Philippines and Taiwan.
China’s air force has also stepped up its drills and patrols in the skies over the South China Sea.
While China is not the only claimant militarising the disputed region, no one else comes remotely close to the ambition, scale and speed of China’s efforts.
The South China Sea has long been coveted by China (and others) due to its strategic importance for trade and military power, as well as its abundant resources. According to one estimate, US$3.4 trillion in trade passed through the South China Sea in 2016, representing 21% of the global total.
China’s goal in the South China Sea can be summarised with one word: control.
In order to achieve this, China is undertaking a coordinated, long-term effort to assert its dominance in the region, including the building of artificial islands, civil and military infrastructure, and the deployment of military ships and aircraft to the region.
While politicians of other countries such as the US, Philippines and Australia espouse fiery rhetoric to protest China’s actions, Beijing is focusing on actively transforming the physical and power geography of the South China Sea.
In fact, according to the new commander of the US Indo-Pacific Command, Admiral Philip Davidson, China’s efforts have been so successful that it “is now capable of controlling the South China Sea in all scenarios short of war with the US”.
America’s declining relevance
China’s efforts are hard to counter because it has employed an incremental approach to cementing its control in the South China Sea. None of its actions would individually justify a US military response that could escalate to war. In any case, the human and economic cost of such a conflict would be immense.
The inability of the US to respond effectively to China’s moves has eroded its credibility in the region. It has also fed a narrative that the US is not “here to stay” in Asia. If the US is serious about countering China, then Mattis’ rhetoric must be followed by action.
First, the US should clearly articulate its red lines to China and others on the kinds of activities that are unacceptable in the South China Sea. Then it must be willing to enforce such red lines, while being mindful of the risks.
Second, the US needs to renew its efforts to cooperate with allies in the region to build capacity and demonstrate a coordinated commitment to stand in the face of China’s challenge.
Third, the US needs to deploy military capabilities in the Indo-Pacific region, such as advanced missile systems, which would reduce the military advantages gained by China through the militarisation of the South China Sea features.
China’s tightening control over the South China Sea is worrying for a number of regional countries. For many, the shipping routes that run through the South China Sea are the bloodlines of their economies.
Moreover, the shifting balance of power will enable Beijing to settle its territorial disputes in the region for good. Without a doubt, China is willing to use its new-found power to change the status quo in its favour, even at the expense of its weaker neighbours.
Control of the South China Sea also allows Beijing to better project its military power across South-East Asia, the western Pacific and parts of Oceania. This would make it more costly for the US and its allies to take action against China, for example, in scenarios involving Taiwan.
On a higher level, China’s assertive approach to the South China Sea demonstrates Beijing’s increasing confidence and its willingness to flaunt international norms that it considers inconvenient or contrary to its interests.
There is little doubt China is becoming the new dominant power in Asia. Its rise has benefited millions in the region and should be welcomed. But we should also be wary of Beijing’s approach to territorial disputes and grievances if it employs military and economic intimidation and coercion.
It may be too late to turn the tide in the South China Sea and reverse China’s gains. No one would run such a risk. But it is not too late to impose penalties on China for further destabilising the region through its actions in the South China Sea.
The challenge is to figure out how to do that, and what we would be willing to risk to achieve it.
Let’s call it the “China syndrome”. This describes a condition that is a bit compulsive and not always rational.
Australia’s response to China’s continuing rise mixes anxiety, even a touch of paranoia, with anticipation of the riches that derive from the sale of vast quantities of commodities.
Economic dependence on China is two-edged and potentially policy-distorting.
To put this in perspective: Australian exports of goods and services to China in 2016-17 were worth $110.4 billion. That accounts for nearly 30% of total exports. This compares with $20.8 billion for the US, or 5.16% of total exports. The EU (including the United Kingdom) accounted for $30.5 billion, or 9.8%.
In other words, nearly one-third of Australian goods and services trade is hinged to the China market. Putting it mildly, such a level of dependence on a single market is not ideal.
In 2017, Australia registered the longest uninterrupted stretch of economic growth in modern history. This surpassed previous record holder the Netherlands with 103 uninterrupted quarters.
That expansion continues. Australia’s commodities exports, driven by Chinese demand, sustain unparalleled growth.
This is the context in which Australia might do a better job managing relations with its cornerstone trading partner and, arguably, its most important bilateral relationship.
This latter observation requires a leap beyond assumptions that security ties with the US mean there is no relationship more critical to Australia’s wellbeing.
That is changing fast as China’s economic might continues to expand and its ability to project military power in the Asia-Pacific grows in leaps and bounds.
None of this is to say that Australia’s security arrangements with the US versus China’s rise represent a zero-sum game. You could argue that security ties to the US have become more important as a consequence. It is simply to acknowledge the world has changed. It is sprinting ahead of the ability of policymakers to keep up.
Take the 2017 Foreign Policy White Paper, for example. Formulated over the period 2016-2017, the paper asserted the need for Australia to bolster its relationship with the US to take account of China’s rise.
On the other hand, and unavoidably, it acknowledged that the Asia Pacific is no longer uncontested space.
As the paper puts it:
Powerful drivers are converging in a way that is reshaping the international order and challenging Australia’s interests. The United States has been the dominant power in our region throughout Australia’s post-second world history. China is challenging America’s position.
Those “powerful drivers” have become more powerful since publication of the white paper.
At the same time, Australian policy towards Beijing has become more ragged, driven by worries about the impetus of China’s rise, concerns about America as a reliable ally under an “America First” Trump administration, and fears about Chinese influence in Australia itself.
Unfortunately, Prime Minister Malcolm Turnbull’s response to the latter became enmeshed in domestic politics, leaving the impression the new laws to forestall foreign interference in Australian democratic processes were aimed at China alone.
Between December 7 and 9, 2017, Turnbull said on three separate occasions Australia had “stood up” against outside attempts to interfere in its internal affairs. This was a pointed and, as it turned out, unwise use of the phrase.
On the last occasion, he said it in Chinese, adding offence to Beijing where such phraseology – “the Chinese people have stood up” – has sacred meaning in Chinese Communist Party history. This was the expression Mao Zedong used when proclaiming the People’s Republic in 1949, after decades of foreign interference, including the deaths of hundreds of thousands of Chinese at the hands of the Japanese.
Turnbull’s intervention raises questions about the quality of China policy advice from his own office.
While non-democracies such as China can thrive while participating in the present system, an essential pillar of our preferred order is democratic community.
Bishop might have phrased her remarks aimed at “non-democracies such as China” more judiciously, while conveying a similar message.
What is lacking in Australia’s approach to its relationship with China is consistency, so the government speaks with one voice and, where possible, separates domestic politics from the conduct of China policy.
Beijing values consistency. It may not like forthrightness in defence of Australia’s legitimate interests in maintaining its own sovereignty and its own security, but it respects firmness.
Canberra should not shy away from articulating its concerns about China’s continued militarisation of facilities in the South China Sea. It should be on guard in withstanding Chinese efforts to interfere in domestic politics.
Policymakers should bear in mind a simple rule of thumb in dealing with China. It will seek to get away with what it can. That includes bullying and bluster.
Peter Drysdale, emeritus professor of economics at the Australian National University and author of a study of the Australian-Chinese economic relationship, told me the government needs to assert its “control of the China agenda”. This has been pushed off course in the recent past.
Drysdale perceives a “structural problems” embedded in the Australia-China relationship arising from “accelerated complications” in US-China relations. At the same time, Washington’s security establishment is pushing an alarmist viewpoint about China’s regional ambitions.
No reasonable observer pretends China’s impulses are benign. The question is how to manage, in a way that is not counter-productive, China’s attempts to spread its influence.
In Drysdale’s view, the greatest risk for Australia is that an erratic Trump administration will undermine a rules-based international order critical to Australian security.
Canberra’s diplomatic efforts over many years have been aimed at drawing Beijing into a rules-based system, promoting certainty in China’s behaviour as a “responsible stakeholder”.
That longstanding impulse of Australian foreign policy is now under stress.
The Australian government needs a reset of the relationship that would move the two countries past a difficult stage caused by a combination of misunderstanding and loose talk.
Australian officials also need to bear in mind that, in a region in flux, Australia’s Asian neighbours are accommodating themselves to new realities at warp speed. Old certainties such as the validity of US security guarantees are being questioned.
The Turnbull government is operating in a much-changed environment. Stakes are high. Levels of anxiety about China’s rise are unlikely to fall. Australia needs to keep its cool and avoid falling prey to a China syndrome characterised by unsteadiness and poor judgement.
China’s expanding influence is complicating strategic calculations throughout the Asia-Pacific region.
Small states, dependent on maintaining high levels of trade with China to secure their prosperity, are loathe to criticise or take actions that Beijing could find objectionable. This is creating a dilemma over how small states can protect their national interests at a time when China’s growing influence threatens the status quo.
New Zealand illustrates this dynamic. It watches China extend its influence into the microstates of the South Pacific, a region where New Zealand (and its ally Australia) have long enjoyed a position of prominent influence.
The South Pacific is a geographic region encompassing 16 independent nations (and a number of associate nations and dependencies). The majority of these are microstates that face an array of economic, social and governance challenges and are vulnerable to natural disasters.
The two largest and most prosperous states by a fair margin are Australia and New Zealand. Historically, they have been the most dominant and influential players in the South Pacific.
Earlier this month, New Zealand’s minister of foreign affairs and trade, Winston Peters, announced his government would spend an additional NZ$714 million over four years on international aid, with the majority going to South Pacific nations. Peters explained that New Zealand’s interests in the region stem from its common Pacific identity, the desire to forge a path of shared prosperity and to uphold New Zealand’s national security that, he added, “is directly affected by the Pacific’s stability.”
Peter’s announcement of increased funding added substance to a speech he delivered to the Lowy Institute in Sydney in early March where he committed New Zealand to “shifting the dial” on its foreign policy approach towards the South Pacific. What went unstated – but was made unmistakably clear in Peter’s speech – was the increased role China is playing in the South Pacific and how this is “changing New Zealand’s relative influence”.
Rising China, growing anxieties
Long overdue, the New Zealand government’s renewed push is a soft-power response to a mounting dilemma that small states face in the Asia-Pacific region. In essence, as China’s power grows, it is leading Beijing to extend its influence into virtually every corner of the wider Asia-Pacific region. In the South Pacific, this influence is being secured through aid, loans (creating debt South Pacific states may be unable to pay off) and building projects.
For a region comprised of fragile economies, China’s aid and loans can help bolster economic prospects. Yet, at the same time, China’s engagement is not selfless. A number of strategic interests drive it. As China builds out its blue-water naval capabilities, there are concerns that it may seek a military foothold in the region.
In March, reporting in Australia cited unnamed sources claiming that China was seeking an access agreement to dock its naval ships in Vanuatu in lieu of establishing a permanent military presence. Both China and Vanuatu denied this claim. True or not, reporting such as this taps into a heightened level of strategic anxiety New Zealand and Australian officials are experiencing.
The New Zealand government does not seek to exclude China from the South Pacific. In fact, it has looked to collaborate with Beijing where it can. The Tripartite Cook Islands/China/New Zealand Water Project is an example of this, but the reset is clear evidence of Wellington’s desire to secure a role in the region as Beijing increases its influence. Yet, at this stage, New Zealand’s decision makers are acting as if there is very little they can do beyond responding with soft power in the form of increased aid and appeals to a common identity.
Ultimately, the constraints facing small states like New Zealand stem from their structural position relative to China, defined by an immense discrepancy in material resources. In short, China is an economic behemoth that, except for the United States, dwarfs every other country in the Asia-Pacific region.
While China is extremely important to the continued economic growth of small states in the Asia-Pacific, for Beijing these small states are relatively insignificant to its own economic fortunes. This gives China a potent lever to influence, compel and coerce states that draw its ire.
Larger economies such as the US and Japan have more room to manoeuvre vis-à-vis China’s increasing influence. Small states like New Zealand are walking a tight rope, lest they adopt positions Beijing finds regrettable and reduces or interferes with its trade.
Recognising New Zealand’s structural position is not to suggest it is powerless in the face of China’s expanding influence in the South Pacific. However, it is all but certain that China’s regional influence will continue to grow at the expense of the influence New Zealand and Australia hold. Decisions will need to be made as to how New Zealand calibrates its foreign policy with this in mind.
One option would be to consider how great New Zealand’s dependence on China truly is. How resilient would New Zealand’s economy be if trade with China were to decrease? According to one report, New Zealand’s economy would be vulnerable but more resilient than others in the region.
Ultimately, balancing China in the South Pacific will require greater coordination with Australia – still the Pacific’s largest donor – and reaching out to other states. Japan, South Korea and the US share concerns about China chipping away at their relative influence. However, Beijing could interpret increased collaboration with larger powers as a sign of regional containment of its growing influence. New Zealand could find itself punished in such a scenario, but running that risk may eventually become unavoidable.
The issue of China’s influence in Australia is complex. It ranges from worries about national security, political donations and media infiltration to concerns about scientific collaborations, Confucius Institutes, the patriotism of Chinese students, and allegiance of the Chinese community. The most recent trope is China’s so-called “debt trap” diplomacy with Australia’s neighbours in the Pacific.
But there’s a simple reason this anxiety about China’s influence is so vexed. For the first time in history, Australia has had to deal with a world power that is not, as longtime defence analyst Hugh White puts it, “Anglo-Saxon”, and is not a liberal democracy. To quote The Australian’s Dennis Richardson in relation to China and the US: “Australia is friends with both, ally of one”.
The media in both countries have played a significant role in inflaming tensions, as well. Increasingly, China is cast in an adversarial light in the Australian media, and vice versa with Australia in the Chinese media.
There is less and less space for journalists who try to put forth an objective opinion and for commentators who attempt to steer the debate in a more rational and less visceral direction. Each side feels the need to simplify its message and take an increasingly radical position.
War of words
Of course, the media narratives in both countries need to be considered in the context of the rise of political populism globally — particularly the triumph of President Donald Trump in the US and Brexit in the UK.
Australia has a free but financially struggling media. This makes for a tricky combination. Take a media sector that is desperate to boost its readership, combine with a populist turn in the political discourse, add a generous dash of fear of China’s growing global power, and stir. The result, while great for sound bites and political posturing, is not a pretty picture, but it does make a good story.
Some commentators argue the public debate about Chinese influence in Australia tends to be dominated by hawkish voices who favour close ties with the US. This strident position runs counter to the diplomatic, business and university communities, who argue for a more culturally sensitive and constructive engagement with China.
To the anti-China hawks, concerns for Australia’s multicultural harmony and social cohesion are secondary.
Meanwhile, China’s extensive soft power ambitions to improve the country’s appeal on the international stage also seem to have been moved to the backburner when it comes to Australia. The charm offensive is no more; it’s now just plain offensive.
Populism also reigns supreme in China, although in different ways. The tighter and wider the scope of the Communist Party’s political control, the less space there is for dissenting voices, and the more fertile the ground becomes for nationalistic discourses to flourish.
In fact, in an increasingly repressive environment of control and censorship, nationalism is the only populist game in town if you want to make a profit.
Over the past two years, the Chinese state media’s reaction to Australia has shifted from indifference to bemusement, and now to anger. This change in tone is evidenced in an article in the Global Times last year:
Australia poses a problem for China. If we mind its silly carryings-on, it will deplete our energy, and it doesn’t seem worth our while; however, if we leave it be and pretend nothing is happening, that would only encourage it, and it may go from bad to worse. Australia is one of the countries that have benefited most from China’s rise, yet it is also one of the most provocative voices in the Western bloc. It is beginning to look like a piece of chewing gum stuck to the bottom of China’s shoe.
The Global Times is a subsidiary newspaper of the Chinese government’s mouthpiece People’s Daily, but unlike People’s Daily, it is profit-driven and licensed to drive sales by pandering to populist sentiments rather than to reason.
The question is whether the Australian media should take the bait, trade insults with The Global Times, and allow such visceral responses to shape the debate.
There are signs the Australian media are not only taking the Global Times seriously but also literally.
In fact, so literally that if you enter the current China debate in Australia and critique some aspect of the anti-China rhetoric — and then get quoted favourably (and possibly out of context) by The Global Times — you may automatically qualify for being labelled a Beijing apologist.
Impact on relations
Can this kind of sustained war of words have an actual impact on how the two countries view one another? Yes, it can.
Anecdotally, I’ve been told by some of my Chinese-Australian friends that their friends and families in China are repeatedly urging them to “stay safe” and “take care of themselves” as Australia becomes more anti-Chinese.
But are Australia-China relations really as bad as the media have been making them out? If you look at the current number of Chinese tourists and students here, maybe the answer is no, or at least not yet. But the business community has already started to suffer.
As recently as two years ago, both countries were hoping to use their respective media to promote public diplomacy towards each other. At the moment, media organisations in neither country are doing that. In fact, public diplomacy has well and truly been replaced by megaphone diplomacy, specialising in what The Guardian’s Katherine Murphy calls “binary and cartoonish talk and analysis”, as is often found in the “graphic novel” genre.
The question we should be asking is not whether the relationship between Australia and China is as bad as the media in both countries portray it. Rather, it’s how much power the media has in shaping this relationship, and whose interests this current megaphone diplomacy is serving.
Buried at the end of the most important Chinese political speech in a decade, President Xi Jinping’s 66-page address to the 19th party congress in November 2017, was one short line: “The Chinese Dream is a dream about history, the present, and the future.” Tired after 71 ovations over three-and-a-half hours, the audience may have missed this sentence. Yet it illuminates how history underpins President Xi’s “Chinese Dream” of national rejuvenation.
Every country has its national myths, most of which are grounded in or derived from history; but in China, history alone is the bedrock. The People’s Republic doesn’t have a religion, and it doesn’t have a constitution – or at least, not one that counts. It no longer even has a revolutionary ideology. It just has history, lots of it.
Forgetting … is a crucial factor in the creation of the nation.
In contemporary China, it’s put into practice with surgical skill. Specific memories of events deemed sensitive by the state are not just forgotten, they are winnowed out and selectively deleted. The Communist Party has succeeded in hacking the collective memory.
National amnesia has become what Chinese writer Yan Lianke calls a “state-sponsored sport”. And as Beijing’s global influence rises, its controlling instincts – to tame, to corral, to shape, to prune, to expurgate history and historical memory – are increasingly being exported to the world.
The first move was an attempt in August 2017 to bully Cambridge University Press into removing online access in China to 300 articles from the China Quarterly journal. These were pieces on topics deemed sensitive, such as the Cultural Revolution and the Tiananmen crackdown.
The publisher at first bowed to Chinese demands and only reversed its position after public backlash. But statements by the Journal of Asian Studies, Critical Asian Studies and Springer Nature indicate that this case is part of a larger campaign.
Chinese censorship has also made inroads into Western publishing houses. For instance, Springer Nature, which publishes Nature and Scientific American, deleted around 1,000 articles from its Chinese website, citing “local distribution laws”. In doing so, Western academic presses end up serving the CCP’s purpose by propagating only state-mandated “correct views of history” inside China, as if no alternatives exist.
China is also censoring its own archives, as work by Glenn Tiffert has forensically uncovered. His comparison of electronic and paper versions of China’s legal journals found that in one journal 87% of the page count had been excised.
At home, Beijing’s tightening grip on history deigns not only what can be remembered, but also the manner in which it can be marked. In the case of the events of June 4 in Tiananmen Square, small-scale commemorations that once flew beneath the radar are now regularly punished, often through vague charges such as “picking quarrels and stirring up trouble”.
A precursor of these new laws went to trial in 2016 when writer Hong Zhenkuai questioned elements of the patriotic war story, “The Five Heroes of Langya Mountain”. This recounts the self-sacrifice of a group of Chinese soldiers who threw themselves from a cliff to avoid capture. Hong questioned whether two of the soldiers may have simply slipped and fallen by mistake.
Hong was found guilty of libel and forced to make a public apology after the court ruled that he had damaged the solders’ “heroic image and spiritual value”. The court argued that Hong should not have disputed the validity of the well-known story precisely because it “constituted part of the collective memory of the Chinese nation”.
Many mainland historians and activists warn that the charge of historical nihilism could be used to muzzle historical research, using the threat of lawsuits to shut down discussion and ensure that the authorities’ view of history remains the only one.
“They want to use falsified history as propagated by the authorities to replace real history for the people,” Sui Muqing said. “They want to erase real historical events that happened. That’s what so-called ‘historical nihilism’ means.”
Even literary works are being targeted as guilty of historical nihilism. The Chinese government has denounced Soft Burial, a novel by Fang Fang about the excesses of the 1950s land reform movement, as a “poisonous weed” and banned its sale. Fang Fang explains the title, writing:
When people die and their bodies are buried under the earth without the protection of coffins, this burial is called a ‘soft burial’; as for the living, when they seal off their past, cut off their roots, reject their memories, either consciously or subconsciously, their lives are soft buried in time. Once they are in a soft burial, their lives will be disconnected in amnesia.
In today’s China, exhuming or even publicly remembering history – even events that happened within our lifetime, such as those of 1989 – is increasingly costly. Soft burial has become not just a reality, but a state of self-preservation.
“In the future, historical research will be impossible,” warned Hong in an open letter. He had previously worked as the chief editor of Yanhuang Chunqiu, a gutsy magazine that addresses Communist Party history. “If you point out the contradictions or holes in what they say, they can use the law to proclaim that you are guilty.”
President Xi has even published a book titled History: the Best Textbook. Yet only one version of history is acceptable: the Communist Party’s own.
The global spread of China’s amnesia
With China’s rise, it now finds itself in a position to amplify its version of history to a global audience. Following the 2017 meeting in Mar-a-Lago between Xi Jinping and US President Donald Trump, Trump described his conversation to The Wall Street Journal:
He then went into the history of China and Korea. Not North Korea, Korea. And you know, you’re talking about thousands of years … and many wars. And Korea actually used to be part of China.
Such a distorted reading is in line with a growing body of nationalist thought in China.
Increasingly, Beijing is marshalling its own version of history to support its territorial claims overseas. This is the case, for instance, of the Nine-Dash Line, which China says gives it a historical claim to virtually the entire South China Sea. China has refused to accept the Hague-based international tribunal’s ruling that this claim has no legal basis. Disgraced Australian politician Sam Dastyari even echoed the “thousands of years of history” line to back China’s refusal to abide by these rulings.
China has also invoked history to legitimise its massive One Belt One Road international infrastructure scheme, despite critics claiming that its premise relies on mythologised history.
The Chinese Communist Party is actively trying to export its version of the past beyond its borders. But these examples should serve as a warning. If Beijing is given a free pass on history, the international ramifications could come back to bite us in the years ahead.